Field demands probe into Bernard Matthews pensions as sale looms

The chairman of a powerful parliamentary committee is urging watchdogs to probe a takeover deal that will see the retirement scheme of Bernard Matthews, the turkey producer, being absorbed by an industry-funded lifeboat.

Sky News can reveal that Frank Field, the Labour MP who has led demands for Sir Philip Green to plug a vast hole in the BHS pension scheme, is calling on the Pensions Regulator to investigate the circumstances of Bernard Matthews' imminent sale to Ranjit Boparan, the food industry tycoon.

A deal known as a pre-pack administration - under which a buyer is lined up to take on a company's assets, but without liabilities such as its pension deficit - is expected to be finalised as soon as Tuesday, according to City sources.

It will involve Mr Boparan's private vehicle acquiring the assets of Bernard Matthews, before they are integrated into his broader poultry empire, 2 Sisters Food Group.

Deloitte, the administrator, is understood to have struck a deal preserving all 2,000 jobs at the Norfolk-based company.

However, the meat producer's pension liabilities will pass to the Pension Protection Fund (PPF), meaning that hundreds of current and former employees at Bernard Matthews face having their retirement payments cut.

Bernard Matthews' defined benefit scheme is said to have a deficit of approximately £16m and roughly 750 members, although these numbers were not confirmed by either the company or its current owner, Rutland Partners, a private equity investor.

Rutland and 2 Sisters both declined to comment.

Under PPF rules, existing pensioners would not see their payments change but could see reductions to future increases, while members who are yet to retire will see their payouts discounted by 10%.

Speaking to Sky News on Monday evening, Mr Field said: "The new employer must not be allowed to get away with dumping the Bernard Matthews pension scheme into which workers have paid.

"The Pensions Regulator needs to act robustly and quickly to stop such activities being mimicked by other asset buyers who wish to dump pension liabilities.

"We cannot have firms changing ownership at the price of pensions being dumped with the Pension Protection Fund - such dumping involves promises being broken, and the cuts in benefit that result."

A spokesman for the Pensions Regulator declined to comment on the circumstances surrounding Bernard Matthews' impending pre-pack administration, but said further investigations could be warranted when schemes passed to the PPF.

"The trustees and/or the PPF may alert us if they become aware of circumstances that merit further consideration of the use of our moral hazard powers and again in those circumstances we may decide to open an investigation," the regulator said.

Known for its "Bootiful" advertising catchphrase, Bernard Matthews has been lossmaking for years.

One insider said Mr Boparan had proposed a deal to Rutland that would have involved him taking on Bernard Matthews' pension liabilities - thereby preventing the scheme passing to the PPF - but it would have required the current owner writing off millions of pounds in loan notes.

That proposal is said to have been unacceptable to Rutland.

Bernard Matthews, which was put up for sale in June , is named after its founder, who in 1950 set up the business by buying 20 eggs and a second-hand incubator.

He sold the dozen turkeys which hatched to a local farmer for the equivalent of £9 in today's money.

The company has grown substantially since then, and now operates across 50 farms and breeds, raises and processes more than seven million turkeys in the UK annually.

Its financial fortunes have fluctuated, however, and the company has been dogged by persistent speculation about its future as well as criticism from the likes of Jamie Oliver, about the nutritional content of its Turkey Twizzler products.

In July, it announced the sale of its German subsidiary for €14m (£12m) in an attempt to reduce debt

Last year's accounts show that in the year to 28 June 2015 sales fell to £276.8m from £306.8m during the previous 12 months.

It made an operating loss last year of close to £1m, and its directors said that investors including Rutland had injected an additional £10m of funding in August 2015.

A PPF spokesman said: "We can't comment on the circumstances of this company.

"In the event of an insolvency event at a company with an eligible pension scheme, members can be reassured that we are there to protect them."

Financial crises at BHS, Bernard Matthews and Tata Steel (BSE: TATASTEEL.BO - news) have reinforced the PPF's importance as a safety net for members of defined benefit pension schemes.

Insiders said that the PPF would announce on Tuesday the appointment of Ian Scott, a former investment strategist at Barclays (LSE: BARC.L - news) and Lehman Brothers, to the new role of head of investment strategy.

The PPF now has more than £23bn in invested assets, including holdings in the Thames Tideway Tunnel and the London Gateway port.

It is also participating in one of the bids for the Green Investment Bank, which the Government is seeking to privatise.

Mr Scott's recruitment comes as the PPF brings a greater share of its investment activity in-house, and will involve him taking a senior role in its asset allocation strategy.

The PPF declined to comment on his appointment.